05 October 2006

Politics and accountability

Our attribution of heroism to those who took crazy decisions but were lucky enough to win shows the aberration – we continue to worship those who won battles and despise those who lost, no matter the reason. … The situation is not much better in a bureaucratic economy. … The contributions of civil servants might be even more difficult to judge than those of the executives of a corporation – and the scrutiny is smaller.

In our complex societies politicians and officials can always evade or deflect censure for their terrible decisions. We can rarely prove that one particular decision was a bad one: there are just too many variables and linkages, too many obscurities and time lags between cause and effect. This is one of the reasons I emphasise the rich countries' agricultural subsidies. These represent not only a calamitous waste of society’s scarce resources; they transfer wealth from the poor to the rich, and they accelerate the degradation of our physical environment. They are also now threatening to derail the entire world trading system. It is their size and persistence over decades that make quite clear that there are no systemic checks on government policymaking; that much of the bad news may result from government activity and much of the good news may occur despite government activity.

I spent two and a half years examining the American political process. All that time I was looking for a straight forward issue. But everything I investigated – election campaigns, the budget, lawmaking, the court system, bureaucracy, social policy – turned out to be more complicated than I had thought. There were always angles I hadn’t considered, aspects I hadn’t weighed, complexities I’d never dreamed of. Until I got to agriculture. Here at last is a simple problem with a simple solution. Drag the omnibus farm bill behind the barn, and kill it with an ax.

One of the aims of a Social Policy Bond regime is to bring some accountability into the policymaking process. Framing policy decisions in terms of costed outcomes is an essential first step. Currently policymakers can - indeed must - express their decisions as vague declarations of intent, backed up by funding programmes for favoured bodies, be they government agencies or other interest groups. Issuers of Social Policy Bonds would in contrast have to be explicit about their objectives: transparency and accountability are built into a bond regime, as surely as they are excluded from the current policymaking apparatus. Insane, corrupt programmes, such as Europe's Common Agricultural Policy, have platitudinous, vague, mutually conflicting goals, which sound lofty and high-principled but actually end up shovelling vast sums of taxpayers' and consumers' money into the myriad bank accounts of massive agribusiness corporates. If outcomes were built into policymaking, as they are with Social Policy Bonds, such policies would get nowhere. Instead they have lasted for decades, at great cost to everybody except a few millionaire businessmen, and a burgeoning, parasitical administrative bureaucracy.

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Social Policy Bonds

See the Social Policy Bonds website for overviews and links to articles, papers, news and more about Social Policy Bonds. Click on the image below to download a 2400-word article, published by the Institute of Economic Affairs, London.

Social Policy Bonds in 2400 words

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Social Policy Bonds in the media

9 October 2015: An article by Greg Bearup on the genesis of the Social Policy Bond idea, and application of a version of it in Australia appears in the Weekend Australian Magazine. (The article can also be downloaded as a pdf from here.)

October 2013: Professor Robert Shiller of Yale University, is named as one of the three winners of the 2013 Nobel Prize in Economics. His Nobel Prize lecture (pdf) delivered on 8 December, mentions Social Policy Bonds. Professor Shiller has for many years encouraged my work on Social Policy Bonds, beginning in late 1996 when he sent me this letter.

3 May 2012: An audio talk by Nobel Prize winner Professor Robert Shiller at the London School of Economics, in which Social Policy Bonds are briefly mentioned, is available here.